A payday loan can be your saving grace in an emergency. But if you forget to pay back the loan or ignore the due date, you can pay additional fees and interest. These quick loans are very different from bank loans in that you don’t need good credit or collateral to qualify. The simple requirements are appealing and payday loans are attainable for many. But unlike bank loans that give borrowers months or years to pay back the debt, payday lenders require repayment in about two weeks.
These strict lending terms turn off some. But if you need cash and you’re running out of options, a cash advance is the most convenient alternative. Rather than avoid payday loans entirely, here are a few tips to help you repay the loan on time.
Understand the guidelines.
Payday loans do not have mysterious terms and your loan agreement will spell out the details. If you’re rushing to acquire funds for an emergency or a bill, you may not pay close attention to the agreement. This is dangerous because you could sign the loan papers without completely grasping the terms. Never sign for a payday loan without knowing your terms, such as your due date and the loan fees. Typically, you have 14 days to repay your loan. Make a note of your due date in your phone or on a calendar to ensure the availability of funds when your lender drafts your bank account.
Avoid unnecessary expenses.
The more you spend between the time that you receive a payday loans and your due date, the harder it is to repay the debt. Hold off on expensive purchases until you’ve settled the balance with your payday loan lender. Dining out excessively, shopping and other expensive splurges can take your extra income, and you may default on the loan.
Borrow only what you can handle.
Know your limitations and only borrow what you can afford to pay back in 14 days. Your payday lender may review your income and determine that you qualify for the maximum amount. But this lender is not aware of your other expenses, such as rent/mortgage, auto loans, childcare or transportation costs. You know your expenses better than anyone, and if you want to repay your loan on time, you need to borrow the very minimum.
Unfortunately, life can take many unexpected turns. You might apply for a loan with plans to repay the debt within two weeks, but if other emergencies occur in the meantime, this can affect your ability to pay off the payday loan. There are several ways you can handle this situation. You can disregard your due date, get hit with additional fees and damage your relationship with the lender, or you can contact the lender and ask for an extension. Extensions increase your total loan cost, but averts any late fees. Depending on the loan company, you can get your payday loan extended an additional two weeks.